The assumed rate of return is the annual estimate PERA’s portfolio must achieve in order to pay current and future beneficiaries.

PERA currently has a $26 billion unfunded liability, or money it owes to current and future beneficiaries that is not available in its fund, according to a Colorado Department of Treasury news release.

And even though PERA does not meet its 8 percent expectation on an annual basis — in 2011 the portfolio earned a 1.9 percent return — the Board voted 8-7 to uphold the 8 percent return expectation, the release states.

Colorado State Treasurer Walker Stapleton, the only state elected official on PERA’s 16-member Board, voted against retaining the 8 percent return and has repeatedly stated that keeping an 8 percent return assumption will jeopardize the retirement outlook for future retirees.

“While the 8-7 vote to uphold the 8 percent return is not the outcome I would have liked, it does mark significant progress,” Stapleton said in the release. “Last year we had a 10-5 vote. I am optimistic that board members are starting to look at current market realities.”

But Katie Kaufmanis, communications director for PERA, said the Board averages its rate of return expectations over a long-term, 30-year period.

Though Kaufmanis confirmed the PERA portfolio returned 1.9 percent in 2011, and incurred negative returns in 2001, 2002 and 2008, the portfolio has earned double digit returns, or close to it, every year since the 1990’s.

Additionally, during the last 25 years the PERA portfolio has earned an average rate of return of 8.5 percent, and 10 percent over the last 30 years, Kaufmanis said.

“We heard from our two actuaries that it should be retained at 8 (percent),” she said. “As fiduciaries of the PERA trust fund, the people that sit on the board have to, by law, act in the best interest of the membership.”

Recently New York City Mayor Michael Bloomberg publicly stated that an 8 percent return was “absolutely hysterical” and even a 7 percent return is “indefensible” when New York City pension officials began discussions to lower its rate of return expectations, the release states.

“This is not a partisan problem,” Stapleton said in the release. “We have seen Democrats, Republicans and Independents across the country take up meaningful reforms to deal with their under funded pensions.

“Today’s vote was not a win but the small margin gets us a step closer to lowering the rate of return and solving this problem for real.”

Kaufmanis doesn’t agree with Stapleton that there is a problem.

“It’s important to realize this is a long-term fund,” she said. “The fact is we can manage people’s money pretty efficiently.

“We’re at .3 percent of assets for managing the money and .1 percent of assets in terms of running the place — so all in .4 percent of assets — which is a pretty efficient way to run a retirement system.”

PERA’s 16-member board consists of 12 members elected by PERA’s more than 500,000 members. Three board members are appointed by the governor and confirmed by the Colorado State Senate. Stapleton rounds out the board in an ex-officio capacity given his role as Colorado State Treasurer.